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For much of the last part of the 20th Century, the world’s middle class was ascendant, expanding and, in most countries, firmly in control of national politics and culture. Yet in more recent decades, this process has been slowly reversed, in the United States as well as in Europe and, increasingly, East Asia.
This erosion of the middle class has many roots. Globalization has savaged many middle-class jobs, whether in factories or increasingly services, transferring employment to China, India, and other developing countries. In many countries, immigration, much of it from poor countries, has posed a threat to wage rates, particularly for lower skilled workers and increasingly professionals as well.
In the United States, long seen as the great land of opportunity, the chance of middle-class earners moving up to the top rungs of the earnings ladder has dropped by approximately 20 percent since the early 1980s. Across the thirty-six countries of the Organization for Economic Cooperation and Development (OECD), the richest citizens have taken an ever-greater share of national GDP, and the middle class has become smaller. Much of the global middle class is heavily in debt, mainly because of high housing costs, and «looks increasingly like a boat in rocky waters,» suggests the OECD.
Traditionally, those classes hurt most by what pundits may praise as «transformative change» would turn to the political class that identifies with their interests. But in many countries where parties once strongly tied to middle- and working-class interests – the Australian and British Labour Parties, the German Social Democrats, or the American Democrats – are no longer working class in nature but dominated by an alliance among the ultra-rich, particularly in tech, well-paid professionals, government workers and those most dependent on government aid.
Capitalism out of the soil
The earliest democracies in Athens and Rome rested on an assertive, property-owning middle class. Later on, as slaves and elites grew to dominate ancient societies, displacing the middle orders, they became more monarchical and autocratic. In imperial Rome, small farmers and artisans were being displaced by slaves imported from the far ends of the expanding empire. Occupations and social status came to be determined by heredity. By the end of the Republic, over 75 percent of all property was owned by roughly 3 percent of the population, while over four-fifths owned no property.1 These were the roots of the political economy that would define the Middle Ages.
This process was reversed slowly, starting with the rise of the autocracy-dominated Venice Republic, and its analogue trading states. The most important development took place later, in the Low Countries, where property ownership expanded as swamps were drained, and dikes rected, allowing new people to own land. As the economic historian Jan de Vries observed, «capitalism grew out of the soil in Holland.»2
With capitalism, and a rising middle class, Holland became a progenitor of modern democracy free from aristocratic or clerical domination, as the expulsion of the feudally inclined Spanish overlords empowered the bourgeoisie.3 The Dutch expanded human rights, including those of religious minorities and women. Dutch culture was family-centered, inventive, sober, frugal, and tolerant. Some immigrants came as merchants or artisans, but even the poorest, observed one Dutchman in 1692, «cannot die of hunger if he works hard.»4
Over the ensuing centuries saw the rise of the yeomanry across large parts of Europe, North America, and Oceania. Rather than create the dystopia that Marx predicted, capitalism, with reforms, instead uplifted a large portion of the masses and created a solid middle class (a designation first used in Britain in 1812). A study covering the United Kingdom, the Netherlands, and the United States shows that all three saw a rapid decline in the concentration of wealth from the 1820s up to the 1970s. Never before had so much prosperity and relative economic security been so widely enjoyed.
Record earnings for Bezos, poverty for the masses
Since the 1970s, the wealth differential between middle-income and upper-income households in the United States has grown. Data from the Census Bureau show that the share of national income going to the middle 60 percent of households has fallen to a record low. Wealth gains in recent decades have gone overwhelmingly to the top 1 percent of households, and especially the top 0.5 percent.[i]
In this period, the affluent class of roughly 1.35 million—the top 1 percent—has done well while the largest gains have been especially concentrated among the top 0.1 percent, roughly 150’000 people.[ii] Since the mid-1980s, the share of national wealth held by those below the top 10 percent has fallen by 12 percentage points, the same proportion that the top 0.1 percent gained.[iii] This pattern has been accelerated by the pandemic. Last year, Amazon tripled its profits and Jeff Bezos made $70 billion while billionaires earned over $1 trillion since March. Alphabet, Amazon, Apple, Facebook, and Microsoft now make up 20% of the American stock market’s total worth.
In contrast, millions of Americans have fallen into poverty or are on the verge of destitution. While large chains have reported record sales during the lockdowns, over 160’000 small businesses have closed. A survey by the advocacy group Main Street America suggests up to 7.5 million small businesses are likely to go out of business if the crisis lasts to the end of the year. As one Silicon Valley wag put it, America increasingly resembles «feudalism with better marketing «.
European countries renowned for their robust social welfare provisions are showing the same pattern. Social mobility has declined in over two-thirds of European Union countries, including Sweden.[iv] Germany is significantly less equal than its EU peers, with richer households controlling a bigger share of assets than in most other western European states. The bottom 40 percent of German adults hold almost no assets at all; barely 45 percent own homes.[v] In Great Britain, a decline in the numbers of middle-wage jobs has depressed wages at the lower end, and increased unemployment among the young; more broadly, it has brought a halt to social mobility.[vi]
The same trends are appearing in East Asia, which until recently enjoyed dramatic growth in the size and prosperity of the middle class. Since 1990, famously egalitarian Japan has seen not only a declining average standard of living but also a considerable widening of the gap between the wealthy and everyone else.[vii] In China, egalitarian socialism may be the prevailing ideology, but the country is now more unequal than most Western nations. Its Gini index—a measure of inequality—has gone from highly egalitarian in 1978 to more stratified than Mexico, Brazil, or Kenya, as well as the United States and virtually all of Europe.[viii] The nascent middle class made some progress, but the big gains occurred in the top 1 percent of the population, and particularly in a tiny fraction of that group. The income of the ultra-wealthy expanded by more than twice the national average rate.[ix] Middle-class Chinese people now find it difficult to buy property or get ahead.[x]
Will the middle class rise up?
China’s autocratic state increasingly looms as the future role model in which the yeomanry is allowed to exist but wields little influence. Certainly, after the events of the past year, Europe and much of the developing world seems anxious to fall into Beijing’s economic and even political orbit.
If European and American business adopt strict environmental policies while China pollutes and bides its time, a European mega-crisis could lead to «noticeable loss of welfare and jobs», observes Eric Heymann, a senior economist at Deutsche Bank Research. And he warns: The policies envisioned in the EU’s «European Green Deal» will not work without «a certain degree of eco-dictatorship». Fritz Varhenholt, a long-time environmental advocate in the German Social Democratic Party, shares this concern, fearing «a dramatic loss of prosperity in Germany».
It’s not unlikely that these policies will elicit protests, as we have seen in reaction both to pandemic- and climate-related restrictions, as can be seen in demonstrations across Europe.
Perhaps a more permanent resistance can be in demonstrations by rural and exurban residents against urban-driven energy policies, particularly attempts to wipe out affordable natural gas and raise energy prices across the board. This was a major reason behind the «gilets jaunes» movement in France and similar protests in the Netherlands.
The tendency for overreach by the very wealthy, and their embrace of «progressive» policies that hurt the yeomanry’s prospects, has already created unusual events like the 2016 election
of Donald Trump, the rise of far-right parties across Europe and the passage of Brexit. Trump may be gone, at least for now, but the increasingly censorious approach of tech titans who control social media and plans to restrict such things as single family homes – not a concern of the upper classes – could widen an already large gap between elite and a large portion of mass opinion. Some have even adopted policies that would seek to impose ever more draconian policies that favor some minorities over whites and, in some cases, Asians as well.
The danger now looms that the yeomanry, afraid of dispossession, will shift towards embracing authoritarian policies from both right and left, much as occurred during the 1930s not only in Europe but also in the United States.
Without the prospect of moving up, there is little reason for immigrants, minorities and, most terrifyingly, millennials to embrace democracy. A loss of faith in the basic values of our society is particularly marked among the young; nearly 40 percent of young Americans think the country lacks «a history to be proud of». Far fewer place a great emphasis on family, religion, or patriotism than in previous generations. Europe is, if anything, moving faster toward cultural deconstruction, by anathematizing its own heritage.5
At the end what we are witnessing, ironically, a return to European feudal patterns that are one part of the continental heritage that we never hoped to see return. Ultimately the real argument is not about philosophy, as many conservatives may prefer, but about class and economics. If the current neo-liberal regime cannot be made to serve the middle and working classes, we could experience the recurrence of class conflicts that we have not seen for the better part of a century.
Jeffrey A. Winters, Oligarchy, p. 78–90, 92; Montesquieu, Considerations on the Causes of Rome’s Greatness and Fall, chap. 2 and 9, in Selected Political Writings (Indianapolis: Hackett, 1990), p. 86–87, 99; Aristotle, Politics, Book 3. ↩
Fernand Braudel, The Perspective of the World, vol. 3 of Civilization and Capitalism, 15th–18th Century (New York: Harper & Row, 1984), 98, 177–178. ↩
Immanuel Wallerstein, The Modern World System: Capitalist Agriculture and the Origins of the European World Economy in the 16th Century (New York: Academic Press, 1974), p. 208–209. ↩
Braudel, The Perspective of the World, p. 186–189; Bernard Lewis, The Muslim Discovery of Europe (New York: Norton, 1982), p. 112. ↩
David P. Goldman, “France Has Neither Nationalism nor Patriotism,» PJ Media, November 11, 2018; Tyler O’ Neil, “German Headmaster Tells Christian Girl to Wear a Hijab to Avoid Beatings From Muslim Classmates,» PJ Media, April 2, 2018; Laura Backes et al., “Religious Symbols Take Center Stage,» Der Spiegel, March 5, 2018; Lee Roden, “Why Sweden doesn’t keep stats on ethnicity and crime,» The Local, May 8, 2018. ↩